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Elsa Hannaford, VP, Real Estate Finance, CIBC: Thanks for joining everyone. We have a great team in the studio today to chat about what&#8217;s going to be happening with all of our teams in 2025, so let&#8217;s jump right in. Scott, you represent an incredibly diversified business. In thirty seconds, where do you see the biggest opportunities and challenges that your clients will face in 2025?
Scott Brown, SVP, Ontario &amp; Prairies, CIBC: Thanks, Elsa. ‘Diversified’ is probably an understatement with industries within the portfolio that cover everything from automotive to agriculture, and everything in between. On the backdrop on what was a relatively robust 2024, with the US economy outpacing Canada, we&#8217;ve got a number of companies looking at investment this year and exploring opportunities, and I think where we see some positive momentum in terms of decision making and capital investments, given the market rate environment, we are seeing some pause and some skepticism around the current geopolitical environment, particularly as it comes to tariffs, as companies are evaluating the current backdrop.
Elsa Hannaford: And, Evan, how does that apply to your Private Equity clients? Are they concerned about the changing US political landscape and tariffs?
Evan Bennitt, SVP, Corporate Finance, CIBC: Yeah, for sure. And even more so with the increasing rhetoric and changes in our own political landscape over the course of the last few weeks. The last five years have been extremely dynamic, with our clients navigating through Covid, supply chain challenges, input cost challenges, inflation, interest rates and any hope that we had for, you know, sailing into calmer and more predictable waters in 2025 doesn&#8217;t seem to have come true.
I would point out, though, that the Canadian economy has successfully maneuvered through a period of tariffs and trade, renegotiation during President Trump&#8217;s first term in office. And the hope is that the current threats are part of broader renegotiation. You know, that ultimately leads to a more balanced outcome. But I don&#8217;t think there&#8217;s any question that, the uncertainty is something that we need to take seriously and proceed with caution until we understand the risks more so.
It&#8217;s important that we&#8217;re engaging in very detailed conversation with clients. That we&#8217;re understanding the potential impact that tariffs could have on their business. And then leaning in, working with them to try to find different ways that we can potentially mitigate some of those risks, whether it be, interest rate or FX hedging in an increasing US dollar currency environment or whether it&#8217;s, you know, working capital support as businesses are looking to potentially source inputs ahead of any change in policy. So, it&#8217;s going to be an interesting period. And it&#8217;s one that everyone is very focused on.
Elsa Hannaford: And Jamie, you recently wrote about this year being a tipping point for indigenous economic reconciliation. Why is 2025 so important for the indigenous economy?
Jaimie Lickers, SVP, Indigenous Markets, CIBC: Yeah, that&#8217;s a great question, Elsa. There are three really critical things happening right now. One is, as we speak, the details on the new federal Indigenous Loan Guarantee Program, are being developed. The potential for that program to have a significant impact on the economies of indigenous communities across this country is unquestionable. We&#8217;re also seeing an unprecedented transfer of wealth to indigenous communities.
Last year, we saw the settlement of a $10 billion claim, a $23 billion claim, not to mention numerous claims in the hundreds of millions of dollars for historic grievances by First Nations. In 2025, we expect, already it&#8217;s January, and we expect to see the settlement of another $10 billion claim and potentially a $50 plus billion dollars settlement for indigenous child and family services.
On top of that, as my colleagues have mentioned, we do expect a change in the federal government and given that the federal government has exclusive legislative authority over many indigenous people in Canada. Any change in federal government policy can have a significant impact on indigenous communities. So, it&#8217;s going to be an interesting year.
Elsa Hannaford: Wow. A lot of things in the hopper for sure. And Tim, switching gears to housing. So, we have the positive impact of reducing interest rates, bringing more buyers into the market. But there&#8217;s also quite a few concerns about lack of supply, especially coming up in the next few years. How is this going to play out?
Tim Samis, SVP, Real Estate Finance, CIBC: Right. So, while there is higher political uncertainty this year that could impact consumer confidence, there are a lot of tailwinds on the demand side that we think are going to bring buyers to the market. You mentioned interest rates. So, we&#8217;re a lot closer to a 4% mortgage rate. If we can get sub that, that&#8217;s a really important psychological hurdle for buyers. We&#8217;ve got a structural housing shortage in Canada, 3.5 million units.
And even recent changes to immigration don&#8217;t really change that. All sorts of pent up demand on the sideline. People&#8217;s lives have moved on. People have gotten married, had kids, got divorced, got jobs, and their housing needs haven&#8217;t caught up. And lastly, favourable changes on the lending side, increasing the cap on insured mortgages, 30-year (amortization), all that&#8217;s great on the demand side, but as you correctly point out, we&#8217;re just not getting enough product to market.
Our run rate right now in Canada is 250,000 units a year. It&#8217;s not enough. The peak was 275,000 units a year. It&#8217;s just not enough. And there&#8217;s a number of reasons that drive that ranging from, restrictive zoning, slow approval processes, trade scarcity, which you&#8217;ll hear more and more about in the years ahead, and higher, and higher development charges that cities apply on development. So, where does it go? It&#8217;s really going to be a tale of two markets.
So, low rise, where inventory is very tight and demand is very high. You&#8217;re going to see prices increase. I was looking at a Royal LePage forecast calling for 7% price increase nationally for low rise. And drilling a little bit further, that&#8217;s 7% in the GTA. In different markets, would then range anywhere from low single-digits to low double-digits. On the condo side, in Toronto, a bit of a different picture. There&#8217;s a lot more unsold inventory in the market right now.
There&#8217;s another 30,000 units a product coming to market in the year ahead. The difference between price for new product and resale is as wide as it’s ever been. So, unfortunately, there&#8217;s not a lot of immediate demand for that product right now. And that will likely lead to some price contraction. And in that same forecast, Royal LePage was calling for a 1% decrease in condo prices in the city, compared to 3.5% increase in prices for condos nationally.
So, in the GTA, that inventory will get cleared out. It&#8217;s a matter of time. Prices will come up on the resale, investors will come back. We&#8217;re confident in that. And if there&#8217;s one thing I hear from client’s time and time again, if the government can lean in and help on speed. Speed, speed, speed. So, whether it is zoning approvals, whether it is building inspection, whether it&#8217;s occupancy certificates, government is involved in a lot of different facets of the process, you know, really doesn&#8217;t move at a blistering pace.
Elsa Hannaford: And moving to succession planning, which I know impacts all of our businesses. I mean, Scott, we&#8217;ve seen research come out that in the next ten years, three out of four business owners are going to be looking to exit their business. What does that mean for your clients?
Scott Brown: Yeah. Great question. I think most of us by now have seen the Canadian Federation Independent Business Report estimates 76% of businesses and approximately $2 trillion in business assets changing hands in the next decade. I think Evan and I joked earlier, around it seems like this trend in this wave has been on the cusp, certainly throughout our careers, but the pandemic has really brought it forward.
I think it&#8217;s slowed down some of that transition that otherwise would have happened much sooner. And I think the pandemic, along with some of the burnout, the age of the principals at this stage&#8230; And many have desires, you know, in terms of their outcomes that aren&#8217;t just about the dollars at hand and the sale price, they&#8217;re about the treatment of employees. They&#8217;re about, you know, the continuity of the business about really, around how do they find the right buyer, which takes time. We all know every sale processes is never the same, and it takes time. And it takes really the right advisors early in the process to make sure that you&#8217;re achieving the desired outcomes.
Elsa Hannaford: For sure. And Evan, what else are your clients focusing on in 2025?
Evan Bennitt: You know, I think a real opportunity as we look at ‘25 is the return of a stronger M&amp;A market. We began to see signs of improving M&amp;A volumes in the latter half of 2024. And with one caveat, you know, the tariff issue, we expect to see that trend continue and accelerate as we go through 2025. You know, the expectation is that, in the near-term, the uncertainty around tariffs will likely slow M&amp;A.
Although, you know, very attractive businesses that don&#8217;t have a whole lot of exposure to cross-border trade will continue to be attracting very high valuations and lots of interest from the markets. Ultimately here, you know, it&#8217;s an environment where we&#8217;ve got lower interest rates, lower inflation, lots of capital on the sidelines looking to deploy. And frankly, investors pressuring for longer held assets to get sold and capital return. There&#8217;s a lot of factors that we expect will drive increased M&amp;A.
Elsa Hannaford: Okay. And Jamie, we talked earlier a lot of changes in the indigenous economy this year. What are the biggest opportunities for growth for your clients?
Jaimie Lickers: I think, further to what Evan said, it&#8217;s in the Mergers and Acquisitions space. Over the last five years, 5 or 10 years, we&#8217;ve seen an increased participation both from nation owned business enterprises and individual indigenous owned enterprises engaging in more mainstream acquisition transactions and most of the major acquisitions that we see now have some component of indigenous participation, whether it&#8217;s through a coalition of nations that are partnering, coming together in a consortium to purchase an equity stake in a business that might be prominent and profitable in their territory, whether it&#8217;s a sole acquisition by single nations. We are just seeing the amount of economic activity by economic development corporations and private indigenous business people across the country grow in a way that is unparalleled. And from my perspective, we are seeing the tip of the iceberg and this activity is going to continue, not just in 2025, but in the years to come.
Elsa Hannaford: Great. So, lots to keep an eye on in the next year. Thank you all for being here. It was a really insightful talk.

What’s ahead for Commercial Markets in 2025

Elsa Hannaford

Vice President, Real Estate Finance

CIBC Commercial Banking

Jaimie Lickers

Senior Vice-President, Indigenous Markets

CIBC Commercial Banking

Tim Samis

Senior Vice-President, Real Estate Finance

CIBC Commercial Banking

Scott Brown

Senior Vice-President, Ontario & Prairies

CIBC Commercial Banking

Evan Bennitt

Senior Vice-President, Corporate Finance

CIBC Commercial Banking

What’s ahead for Commercial Markets in 2025

Read Transcript

Elsa Hannaford

Vice President, Real Estate Finance

CIBC Commercial Banking

Jaimie Lickers

Senior Vice-President, Indigenous Markets

CIBC Commercial Banking

Tim Samis

Senior Vice-President, Real Estate Finance

CIBC Commercial Banking

Scott Brown

Senior Vice-President, Ontario & Prairies

CIBC Commercial Banking

Evan Bennitt

Senior Vice-President, Corporate Finance

CIBC Commercial Banking

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